November 24, 2009 4:22 PM
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Economic Smack-Down: Inflation vs. Deflation
In today's "Reality Check," MoneyWatch Editor-in-Chief Eric Schurenberg and I discussed the economic smack-down of the moment: inflation vs. deflation.
Although most economists understand that a recession, especially one highlighted by significant deleveraging, is deflationary, the worry is that the massive government spending spree (trillions of dollars since Lehman's collapse) will lead to higher inflation down the line.
Perhaps one of the reasons that investors are stymied right now is that they are unsure which is the more likely outcome. Not to put too much pressure on all of us, but waves of inflation and deflation can last for many decades, so we'll be revisiting the battle in the weeks and months to come.
© 2009 CBS Interactive Inc.. All Rights Reserved. Although most economists understand that a recession, especially one highlighted by significant deleveraging, is deflationary, the worry is that the massive government spending spree (trillions of dollars since Lehman's collapse) will lead to higher inflation down the line.
Perhaps one of the reasons that investors are stymied right now is that they are unsure which is the more likely outcome. Not to put too much pressure on all of us, but waves of inflation and deflation can last for many decades, so we'll be revisiting the battle in the weeks and months to come.
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Jill Schlesinger Jill Schlesinger, CFP®, is the Editor-at-Large for CBS MoneyWatch. She covers the economy, markets, investing or anything else with a dollar sign. Prior to the launch of MoneyWatch in 2009, Jill was the chief investment officer for an independent investment advisory firm. In her infancy, she was an options trader on the Commodities Exchange of New York.
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